A training exercise at the Waiouru Military Camp. Matthew Hooton argues for universal military training, saying it could be like Outward Bound for everyone, with basic military skills thrown in.
A training exercise at the Waiouru Military Camp. Matthew Hooton argues for universal military training, saying it could be like Outward Bound for everyone, with basic military skills thrown in.
The Government plans to at least double defence spending, costing billions more annually.
Introducing universal military service could provide social, economic, and fiscal benefits alongside increased defence investment.
Finance Minister Nicola Willis had some good fiscal news this week with reports only 249 families are receiving the full value of Christopher Luxon’s tax package. That will save some tens of millions of dollars to spend elsewhere or – fingers crossed –reduce the deficit.
But almost everything else is more terrible than ever.
As Willis tells anyone who will listen, lower global and domestic growth – let alone a global crash – will be bad for exports, employment and her accounts.
Since Donald Trump’s Liberation Day, the IMF has lopped 15% off its global growth forecast for 2025, and 9% for 2026. Our Reserve Bank’s “nowcast” for March-quarter growth has fallen 30%, from 1% before Liberation Day to 0.7% last week.
The June quarter will surely be worse, with our dollar having risen 5% against the US dollar and Chinese renminbi since April 2, pushing our trade-weighted index up 3%, which will slow export-led growth.
The only upside is this should lower inflation, which rose to 2.5% in the March year. Interest rates should thus keep falling, perhaps as low as after the global financial crisis and Canterbury earthquakes.
Yet, however low they fall, our economy will be smaller than expected, so that tax revenues will be down and welfare payments up.
Debt-servicing costs will also rise significantly.
Trump’s antics have increased yields on US 10-year bonds by over 10%, from around 4% on April 2 to 4.4% yesterday. With US debt already at 100% of GDP, its debt-servicing will now cost another US$135 billion annually. That entire amount must also be borrowed, plus US$500b a year for Trump’s promised tax cuts.
Even without those deteriorations, the US fiscal deficit is above 6% of GDP and approaching an annual US$2 trillion. The tax cuts would push US federal debt above 200% of GDP by mid-century.
Trump’s shambles has flowed into our debt markets.
Our 10-year bond yields have stayed stubbornly above 4.5% all year and have peaked at 4.8%, compared with the 4.4% picked for June 2025 and the 4.2% for June 2026. Willis’ debt-servicing costs seem set to pass $10b in 2026 rather than 2027 as previously forecast.
For context, that would be up from $2.9b in 2022 before Grant Robertson’s last two years of reckless post-Covid borrowing, the $3.5b Steven Joyce had to find in 2017 to service Sir Bill English’s debt, and the $2.5b Sir Michael Cullen budgeted for in 2008 before our new borrow-and-hope era began.
International events, the tax cuts and the Government’s failure to seriously cut spending or increase revenue mean the National-Act-NZ First Government is borrowing at a faster rate than Labour in 2023, the Taxpayers’ Union highlighted this week. Government debt grows by over $1 million an hour.
These numbers don’t yet include the Government’s commitment to double defence spending based on its 2025 Defence Capability Plan and the expectations of our Australian ally and Nato and Indo-Pacific Four friends that we invest at least 2% of GDP in defence.
That expectation will rise to at least 3% of GDP when Nato reveals its new target in June. Assuming some GDP growth, that would cost Willis about $10b more per year.
Luckily, Nato’s methodology allows flexibility in spending the money.
It says at least 20% should go into major new equipment, which we’ll meet by buying new helicopters, troop planes and frigates.
A Royal New Zealand Navy Kaman SH-2G Super Seasprite helicopter on board HMAS Anzac during Exercise Bersama Gold 21. Photo / ADF
For operational spending, it includes land, maritime and air forces, but also spending on police, coast guards and so forth, if they’re trained in military tactics and could realistically support a military force abroad.
Also included are meteorological services, research and development, stockpiling equipment for emergencies, developing military-capable airfields and military pensions.
That invites Willis and Defence Minister Judith Collins to think creatively about how they might spend the extra $10b a year to keep Australia and Nato happy, on top of the demands of New Zealand’s existing Defence Capability Plan.
As Economic Growth Minister, Willis might see merit in greater investment in local defence-industry players, like Tauranga’s successful Syos Aerospace or RocketLab, whose American division has just won a US$46b US Air Force contract.
As Social Investment Minister, Willis could consider whether New Zealand should follow European Union countries in introducing compulsory or even universal military service – the difference being that “compulsory” means everyone being eligible for a draft while “universal” means everyone actually participating.
At least since Sir John Key’s Burnside speech 18 years ago - that Willis wrote – and Dame Jacinda Ardern’s worries about child poverty, New Zealand policymakers have claimed concern about a vast and growing underclass living unhappy lives, while costing taxpayers a fortune, committing crime and hampering economic growth.
If New Zealand really plans to spend billions more on defence, why not invest it in universal military training, not as an ambulance at the bottom of the cliff like boot camps, but as a fence at the top?
It need not be brutal military training from World War II movies but, in effect, Outward Bound for everyone, with basic military skills thrown in.
With our schools and primary health services struggling, there would be screening for illiteracy, innumeracy and mental health problems, including drug and alcohol abuse.
Gen Z and Gen Alpha would all learn basic adulting skills, like cooking, cleaning, changing a tyre and making a school lunch, that their Gen X and Gen Y parents have failed to teach them or develop themselves.
The whole population would be trained as first responders and in emergency management, critical skills on our earthquake-prone islands and if climate change causes ever-more frequent and extreme storms. We could better respond to humanitarian crises in the Pacific. More New Zealanders could participate in projects like mine clearing, peacekeeping and international aid work, and consider full military careers. In the unthinkable event of a physical invasion or to help defend Australia, we would have an already-trained militia.
Opportunities for genuine conscientious objectors could be provided through churches, marae, other community groups and Taskforce Green.
Opting for universal participation would also help with nation-building and social cohesion in an age of social-media addiction and political polarisation. Our defence forces are leaders in integrating Māori and European tikanga and demonstrating the value of each to the other.
With 70,000 New Zealanders turning 18 each year, this would be a major undertaking. But around 9000 aren’t in employment, education or training, thereby already costing taxpayers in the immediate and longer terms.
This may seem radical. But, if we must spend $10b a year more on defence to keep Australia and Nato happy, why not get some social, economic and ultimately fiscal gains out of it as well?
Disclosure: Matthew Hooton has over 30 years’ experience in political and corporate communications and strategy for clients in Australasia, Asia, Europe and North America, including the National and Act parties and the Mayor of Auckland.
